Buying a Home

Buying a home is exciting. Not knowing what is involved can be a little overwhelming and intimidating.

When you have decided you are ready to look into purchasing a home, consider the following to help guide you on your way:

How Much House Can You Afford?

Evaluate your financial situation as lenders do. Typically your total monthly housing costs (PITI) should not exceed 28% of your gross monthly income. (Or, housing costs plus any outstanding monthly long-term debt should not exceed 36% of gross monthly income.)

After you have done this, determine how much your financial institution is willing to lend you. Know how much you can afford in monthly payments. Lenders factor in sales price and down payment, but place more importance on how much you can handle monthly.

What Type of House Do You Want?

Describe the style of house you like - whether it be a two-story, contemporary, ranch or other style. Then list your priorities in home features - such as a 2 or 3 car garage, gourmet kitchen, family room, etc. Also don't forget to think about your lifestyle. If you don't like yard work, ask your agent to show you condominiums, townhouses, or garden homes with smaller yards.

Finding Your Home

Your new house has to feel right - but emotions set aside, it has to work right too. Bring in a professional building inspector or appraiser to make sure the house is in sound condition. Use this report to make informed decisions. Ask the seller if a home warranty comes with the home. Sellers often include this in the sale of the home which warrants for a specified period of time certain parts of the home. After all information has been gathered, decide which flaws you can live with and which you'd prefer to repair.

Making Your Purchase

When you find the perfect house, you know the seller's asking price, now it's your turn to make some important decisions. Decide how much you should offer. Consider factors such as the home's length of time on the market, reasonableness of price, availability of financing and other costs.

Know what happens to your earnest money. This deposit is held by a third party such as your sales professional, title company or escrow agent until the sale is closed or contract is broken. If you buy the house, it is applied to the down payment or closing costs. If you fail to buy the house after the seller has accepted your offer, he or she has the right to keep this deposit.

Require the seller to do a title search to prove the title is clear. The title should show no substantial claims or liens against the property.

Decide what type of deed you want. You'll most likely specify that the seller convey the property to you with a general warranty deed that transfers ownership rights (or title) to you.

Decide what conditions you want to place on buying the house. Your purchase may be made contingent on obtaining financing, a building inspector's satisfactory report, or the selling of your present home.

Note what you're buying in the contract. Common items to be specified include appliances, light fixtures, shades, drapes, storm windows, flowers, shrubs, trees, etc.

Determine what special provisions should be included - such as property taxes, insurance costs, and utility bills. Read all small print carefully.

And lastly, decide who is your settlement agent, the closing date, and the possession date. Allow yourself plenty of time for financing and all the paperwork in the transaction.

Good Luck!